In order to secure the space for the Mudd Club (a loft owned by artist Ross Bleckner), Steve Mass described the future venue as cabaret. Mass claimed to have started the nightclub on a budget of only $15,000.

From the start it functioned as an “amazing antidote to the uptown glitz of Studio 54 in the '70s”.[2] As it became more frequented by downtown celebrities, a door policy was established and it acquired a chic, often elitist reputation.

Live music at the club featured New York "no wave" bands like DNA, Nona Hendryx's Zero Cool, The Contortions, and Basquiat's band Gray. In 1979, Talking Heads performed songs from their new album Fear of Music to a packed crowd of punk rockers. Tim Page produced several concerts at the Mudd Club in 1981, in an attempt to meld contemporary classical music with rock and pop. On the dance floor, DJs David Azarch, Anita Sarko and Johnny Dynell played a unique mixture of punk, funk, and curiosities.

Six months after it opened, the Mudd Club was cited in People Magazine: “New York’s fly-by-night crowd of punks, posers and the ultra-hip has discovered new turf on which to flaunt its manic chic. It is the Mudd Club.... For sheer kinkiness, there has been nothing like it since the cabaret scene in 1920s Berlin.”[5]

After its first few years, Studio 54 celebrities like Andy Warhol and David Bowie began to show up. In 1981, the Mudd Club's Steve Mass began showing up at the more informal Club 57 on St. Mark's Place, and began hiring Club 57 crowd (including Keith Haring[6]) to help acquire part of that downtown scene.[7]

The Mudd Club closed in 1983. Some regulars noted, "At the end, it was not much fun anymore. I mean, it had just become--kind of like the hangers-on to the hangers-on at the Mudd Club."[8]

Steve Mass later opened another Mudd Club in Berlin in 2001 (located at Grosse Hamburger Strasse 17); this Berlin club was considered an intimate venue for touring bands.

In 2007, the arts organization Creative Time placed a plaque on the NYC building to commemorate the club's existence.[9]

On October 28–29, 2010, a 30-year reunion of Mudd Club artists and regulars was held at The Delancey nightclub in Manhattan. Many bands and performers from the Mudd Club and Club 57 performed, including Bush Tetras, Three Teens Kill Four, Comateens, and Walter Steading. A crowd of now-middle-aged Mudd Club regulars were reacquainted for the first time in years. The Mudd Club reunion was also attended by the two original doormen, Joey Kelly (Buddy Love, All Mobbed Up, Joey Kelly Allstars) and Richard Boch (author and painter)[10][11]